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Why Do Consumers Buy? (Part II: The Art of the Sale)

In Part I, we examined the buying process, giving insight into why consumers buy and the behaviors exhibited before, during, and after purchases are made. Now, let’s talk about the impact of sales. Everybody loves a good sale. But why? Why is it that consumers feel more inclined to act on a sale item? This is the breakdown.

 

In short, sales event and limited time purchases remove the majority of the cognitive dissonance we feel when we make purchases at original price, mainly because we, as consumers, associate a sales with value. When consumers buy, there is often a period of wavering that ensues. Did I make the right decision? Were there better options? This is natural, but when we act on a sale, these feelings tend to be more justified. Even though you still spent money, you fell better about the decision, because you didn’t pay as much as other consumers.  

 

It seems, we have limited defenses for an an irresistible bargain. Giant reductions and the way they’re marketed and presented in stores and online tap into some primal psychological impulses.

 

Here are five insights as to why sales are so tempting:

 

  1. Perceived Value

 

Most people don’t understand why one jacket is $50 and another $500. So, we rely on the price as a measure of quality, style, and worth. This is perceived value – the worth that a product or service has in the mind of the consumer. For the most part, consumers are unaware of the true cost of production for the products they buy. Instead, they simply have an internal feeling for how much certain products are worth to them.

 

This explains why the $500 jacket that is on sale for $150 seems like a better purchase than the $50 jacket at its original price, not because of the amount being spent but how it’s being spent. Consumers purchasing the more expensive jacket on sale see value; an opportunity to have a jacket that’s higher quality at a fraction of its original cost, even though they’re spending more money and most likely have limited knowledge of the actual quality of the product.

 

Let’s look at perceived value from a different angle. Think about 2 identical jackets, both currently priced at $99. Jacket #1 carries an everyday price of $99. Jacket #2 is on sale for $99, originally priced at $199. Which would you be more inclined to buy?

 

Jacket #1 has a fixed value. Little is left for the consumer to calculate. The consumer determines the value and decides whether it’s worth the purchase or not, unconsciously estimating that Jacket #1 will always be $99. The consumer has one point of reference. There is no comparison to be made, as seen in the example of Jacket #2.

 

Jacket #2 makes things interesting, leaving more for the consumer to think about in terms of value. As consumers, there are a number of factors we consider when determining the value of a product. Typically, in the minds of consumers, higher price point equals higher quality. The sale price of Jacket #2 triggers a stronger reaction, because the value is expressed in more deliberate fashion. In this example, there is power in comparison.

 

In a vacuum, we’d be able to look at both jackets and determine, regardless of original prices, we’re getting the same jacket at the same price ($99). However, the presentation of sale pricing and points of comparison for Jacket #2 lead us to believe it carries more value. This is a common pricing strategy and a marketer’s playground. By affecting the perception of value, you create a sense of urgency and in turn, affect the way consumers interact with products and determine value.

 

  1. Fear of Missing Out

 

By nature, we want to feel a part of, as opposed to apart from. As it relates to sales, we understand this to mean that when something is sold, our opportunity to buy is gone for good, whether this is true or not. The concept inspires a fear of missing out that consumers often fail to consciously notice, which only enhances the power of their emotional reaction. You may not understand why you’re compelled to jump on that sweater discounted by 50%. You may not even realize that you actually didn’t like it before the price was reduced, yet the feeling of missing out on what seems like a terrific deal is overwhelming.

 

The urge to snatch up a bargain before it’s gone is especially potent with online shopping, when you can see merchandise selling out before your eyes and can’t see who else might be considering making the move. In stores, you can at least physically hold the item while considering its true value.

 

Technology just makes things even more irresistible, especially for online consumers. Remarketing is the devil in sheep’s clothing to an online shopper. Once you view something online, the product will follow you around, wherever you browse. See something you like on Amazon? It’s nearly guaranteed to pop up on your Facebook and Instagram feed or in a banner on a YouTube video you’re viewing. Marketers have gone digital, and there’s no turning back. So, if you suffer from FOMO, and you’re an online shopper and avid social media user, you’ll have plenty of opportunities to close the deal.

 

  1. Competition

 

Shopping is often described as a competitive sport. And with items that are discounted and in short supply, the fear of “missing out” is heightened by the knowledge that you’re competing with others.

 

For some consumers, “winning” by way of beating others to get that last item on sale is the goal, regardless of what the item is.  A crowd of consumers heightens emotions and amps up our competitive instincts. The chaotic atmosphere reduces our ability to think carefully about the true value of what we’re buying.

 

  1. Saving or Spending?

 

Sales and store receipts are constantly pointing out how much consumers are saving. This is no coincidence. This is tactical. Quite obviously, when consumers buy products, they’re spending—and that’s the opposite of saving. And the irony of it all is that several studies show “bargain” shoppers spend more money than consumers purchasing products at original prices.

 

Sales draw consumers into the stores, they spend more time, and usually spend more money buying more than what they came to purchase. More – that’s driving force behind these sales tactics. Consumer feels they’re getting more. They end up spending more. Retailers make more.

 

  1. Time Investment

 

Monitoring sales is a time-consuming process. It’s often an emotional investment too. Many consumers feel pressure to make good on that investment by not leaving a store empty-handed when a sale pops up. Finding something—anything—to buy can feel like winning a scavenger hunt.

 

The Conclusion

 

The allure of the sale is founded in consumer psychology. Consumer behaviors are directly affected by sales and limited time purchase events in a variety of ways. The art of the sale is constructed with the aforementioned conditions in mind. In order to appeal to the emotions of the consumer, retailers must create an experience, not just a sale.

 

Bold messaging helps marketers shape an exclusive offer that seems personal, and thus, irresistible. If, as consumers, we feel we’re getting more value, logic and reason tend to take a backseat. We want what we want when we want it. Add greater value, and we’re quicker to pull the trigger to purchase.

 

Including calls to action in your email marketing is a necessity. If you fail to present value to your customers, you’re giving your competitors business. Consumers inboxes are bombarded with offers on a daily basis. With so many options and increasing accessibility, it’s dangerous to rest on the laurels of loyalty. Instead, assume value trumps loyalty. Implement a call to action with purpose, and keep your customers engaged by showing them the value they seek.

Next: Exclusivity in the Luxury Market

 

In the luxury space, savings are not as appealing. Exclusivity, however, is. We’ll examine why it’s important for luxury consumers to have products and services others don’t, and how marketers frame these exclusive offers.

 

Using Last-Click Attribution? You’re Hurting Email: Part One

By Ken Magill

If there is one area of marketing that has needed an overhaul for years, it’s sales and lead attribution. And current trends indicate that overhaul is finally in full swing.

 

In a world where last-click attribution is the most widely used metric for assigning lead and sales credit, email doesn’t get even close to the credit it deserves.

 

Likewise, search gets far more credit than it deserves.

 

Think about it: Someone performs a Google search, finds what they’re looking for in either the sponsored or non-sponsored links, clicks through and makes a purchase. Google didn’t drive the initial search. Something else did, be it a TV commercial, online advertising or an email.

 

But in most marketing departments, search gets credit for the sale.

 

Fortunately for every channel not called search, marketing is moving away from last-touch attribution and toward so-called multi-touch attribution.

 

Also known as fractional attribution, multi-touch attribution is the practice where marketers assign percentage values to different ad exposures in an attempt to credit them accurately for the amount of influence they had in driving results.

 

Multi-touch attribution is best suited for companies heavily reliant on digital because it struggles with traditional channels such as radio and television. However, the multi-touch attribution industry—yes, it’s an industry and it’s big—is working toward a day when multi-touch attribution can account for all channels.

 

The Mobile Marketing Association in May released the results of a survey in which 150 of the top marketers said they are using multi-touch attribution—known in industry parlance as MTA and not to be confused with message transfer agent—and an additional 250 are seeking a solution in the next 18 months.

 

So MTA is gaining ground. Yet most marketers are still not applying MTA broadly in their organizations, leaving on average about 65 percent of their spending unassessed by MTA, according to the MMA.

 

Also, while most believe that MTA is marketing measurement’s Holy Grail, in the survey two-thirds of marketers were uncertain whether MTA pays for itself, according to the MMA

 

“The findings suggest that marketers’ biggest priority for MTA is the ability to show lift in campaign performance and improve validation of results,” the MMA said in a report.

 

The MMA is focused on MTA because mobile industry professionals are—probably correctly—convinced that like email the mobile channel isn’t getting the credit it deserves for its influence in customers’ and prospects’ buying journeys.

 

The MMA aims to change that. Email marketers should share that aim.

 

Email’s greatest strength as a marketing channel is that it is so inexpensive. Likewise, email’s greatest flaw is it’s so inexpensive. Most email marketing programs are chugging along fine pretty much on autopilot as far as C-level executives are concerned.

 

Thing is, most email marketing programs—even as neglected as so many of them often are—are doing better than fine. They’re driving sales for which other channels are getting credit.

 

An email campaign goes out, and inbound-call-center and search-related purchases spike. It happens all the time.

 

At its Google Marketing Next conference in San Francisco in May, the company announced Google Attribution, a new free solution that uses machine learning to assign values to the various advertising touchpoints in customers’ buying journeys.

 

The announcement signaled a big step toward an industry-wide movement away from last-click attribution.

 

And while the growing implementation of MTA can be seen only as good news for email as a channel, many marketing departments will not have the six-figure budget required for a complete MTA solution.

 

Yes, Google Attribution is free and as the old saying goes: “You get what you pay for.” Google Attribution is aimed at giving users a taste of Google’s MTA capabilities and getting them to upgrade to Google Attribution 360, which is said to cost $150,000 a year—still quite inexpensive by current industry standards.

 

According to the MMA, marketers on average pay $500,000 a year for MTA solutions.

Also, even with C-level buy-in, MTA is often politically challenging to implement across an organization.

But there are tactics any email marketing manager on a tight budget can implement independently that can convincingly demonstrate email’s otherwise unmeasured effects on sales.

 

We’ll start delving into those tactics in Part 2 of this series.

Why Do Consumers Buy? (An Introduction)

Understanding the buying process is an integral part of developing a sound marketing strategy. From the early stages, in which consumers recognize a need and search for information, to the later stages, including purchase decisions and post-purchase behaviors, each step in the buying process reveals critical information that is useful to marketers. In this series, we’ll explore the different models that define the buying process, break down the allure of exclusivity and scarcity as it pertains to consumer behaviors, and examine the epic failure of a household name in the retail space.

At times, purchasing a product or service is an emotional investment. Consumers first recognize that they have a need or problem, often triggered by stimulation. Whether it be internal stimuli, such as hunger or thirst, or external stimuli, a television commercial or advertisement, this trigger accelerates the recognition of a need that must be fulfilled. This is the most important stage in the buying process. Without recognition of a problem, purchasing cannot take place. After the need has been identified, consumers advance to the exploration stages.

Now we have a problem. How do we resolve it? We search for information and evaluates alternatives, or competitors. The significance of the purchase affects the duration of these stages. If you’re buying a blender, you may spend some time browsing consumer reviews and pricing comparisons, but ultimately, you know what you’re getting in a blender. And it won’t break the bank. If you’re buying a bed, not only are you online checking out reviews, but you’re in the stores lying down to test comfortability, durability, and specifications. I bring my tape measure and pillows. This is an investment – something you know you’ll be using for a long period of time, and you want to get it right. This, too, is a powerful stage in the buying process, because this is when you can capture the height of emotion. In some cases, impulsivity takes over, and the need, coupled with a primed solution, overpowers the ability to reason. You can thank millennials for the increase in impulse buying. Technology and accessibility is and will to continue to shape how and what we buy. But that’s a story for another day. For now, let’s move on to the next stage – making a decision.

Purchasing decisions can be significantly deterred by the information and evaluation stages. Think of consumers as pedestrians at a crosswalk on information superhighway. It can be difficult to cross that road in the midst of distractions, such as negative consumer reviews, near endless product selection, and sheer indecisiveness. As marketers, it’s our job to build a bridge to ease access to the other side of the road – to establish a convenient and sensible path to our products and services. Understanding the significance of consumer reviews and volume of noise consumers encounter during the buying process will help bridge the gap. Monitoring consumer reviews of your products and encouraging consumers to leave positive reviews will allow you to gain control of your customer experience.

Purchasing is obviously important, but after consumers buy, a whirlwind of emotions can take place. This is the stage of post-purchase behaviors. Think customer retention. They’ve purchased your product, and now they’re either satisfied or dissatisfied. This directly relates to the aforementioned section regarding consumer reviews. Naturally, if someone is unhappy with a product or purchasing experience, they’re more likely to leave negative feedback, as to compared to a consumer who has had a positive experience leaving positive feedback. Being proactive in this space can pay dividends. If someone is unhappy, find out why, acknowledge the concern, and improve the buying experience. Likewise, if someone loves the product, employ a retention strategy to keep them coming back. The post-purchase behavior stage is what makes or breaks businesses. You want people to buy once. But that’s not scalable. Being aware of these post-purchase behaviors can help you build a sound customer retention strategy and create brand loyalty. Loyal customers tell their friends. And they tell their friends.

In following installations in this series, we’ll dive into the correlation between the buying process, exclusivity of luxury products and scarcity as it pertains to sales items. Here’s a sneak peek.

But, it’s on sale

When it comes to basic economics, scarcity and exclusivity can lead to an increase in demand and a greater sense of value for products. In this segment, we’ll explore the power of sale strategies and the allure of exclusive or limited edition products in the luxury space.

Everyday low prices

JCPenney’s major pricing misstep has haunted them for nearly a decade. After the initial debacle, which included the replacement of sales through coupons with everyday low prices, JCPenney is still losing money and burning cash, with no turnaround in sight. In this segment we’ll break down the pricing strategy, why it failed, and how it affected consumer behavior.

Stay tuned.

 

SellUP & SailThru: Predicting The Future (or something like that)

It goes without saying that customer acquisition is vital to the success of any business in the retail and media spaces. But we need to say it – not to simply drive this point home, but to begin to address the bigger picture. When developing marketing strategies, there can be a tendency to expend the majority of time and effort focusing on acquisition.

 

How do we get people to buy our product or service?

 

While this is significant question to answer, it is important to ask a follow-up question. Then what? If your goal for a customer acquisition is a single purchase, you can stop reading. For those of you interested in innovative ways to not only acquire but retain customers, read on as we discuss SailThru’s Prediction Manager, a groundbreaking tool that’s making marketing smarter.

 

Sailthru Prediction Manager enables brands to drive more intelligent marketing with greater insights on consumer behavior, including highly accurate individualized predictions. Prediction Manager is built-in to SailThru’s Customer Retention Cloud, so it’s easy to set up, integrate, and manage predictions across email, mobile and web.

 

So, how does it work? SailThru has developed advanced algorithms designed to capture data left behind by consumer engagement. This information is learned and interpreted, resulting in real-time predictions about consumer purchasing and engagement behaviors, even which specific products piqued their interest.

 

With these predictions at your disposal, you can approach retention with more focus, as if you’re reading your consumers’ minds. And let’s face it, with technology advancing at the speed of light, retention is often a matter of who’s quickest to draw. With the Prediction Manager, you can form more specific strategies based on consumer behavior, target people who are most likely to buy, and personalize and optimize content to more specific segments.

 

But does it actually work? Numbers never lie.

 

Retail: Rent The Runway

  • 28% reduction in desktop email acquisition cost
  • 40% reduction in mobile acquisition cost
  • New customers expected to be 28% more valuable in next year

 

Media: SheKnows

  • 45% – 49% reduction in email acquisition cost
  • 63% – 107% increase in page views
  • higher expected value per subscriber

 

At SellUP, a team of experts is dedicated to integrating SailThru’s technology for their clients. SellUP leverages the Prediction Manager to significantly increase sales and engagement and decrease email frequency for people most likely to opt out. With this partnership, you get the best of both worlds. SellUP understands the lifecycle of email marketing and consumer tendencies, and SailThru provides smart data and the predictions necessary to present the right kind of messaging to subscribers at the right time.

 

Cold lead generation and segmenting our databases and email lists based solely on open and clickthrough rates are antiquated. There’s a better way. We have better information. You just have to know how to reach out and grab it. SailThru knows how to grab it.

The Power of Habit: Emotional Connection vs. Convenience

hab·it

/ˈhabət/

noun

 

  1. a settled or regular tendency or practice, especially one that is hard to give up.

 

We are creatures of habit. From the moment we get up in the morning, our habits begin to affect how we function. Think about your morning routine – the order in which you perform your daily rituals. Whether it involves hygiene, beverage of choice, breakfast, reading materials, or checking your social channels, there is a developed tendency that provides order and comfort. This concept of how habits are formed, as it relates to branding, is something we should explore.  Consumer behaviors are evolving, and the landscape is shifting. Advances in technology leave us asking an important question. Which is more impactful – emotional connection or convenience?

 

The short answer is both. But let’s dive deeper.

 

The purpose of branding is to create an experience for the consumer – to tell a story that establishes an emotional connection. Emotions can exert a more powerful behavioral effect than purely rational decision-making. If a consumer has a great experience with a brand that activates a core emotional response, they begin establishing a valuable sense of loyalty. When consumers are truly engaged, they become an advocate for your brand and are more likely to amplify the message.

 

We live in a world of noise. Content is king, and it is EVERYWHERE. Consumers are more accessible than ever. And so are brands. Let’s look at social media. With the advent of these information superhighways, word travels faster than ever. It’s up to the brands to keep pace. Social channels provide a unique opportunity for brands to create and sustain the aforementioned emotional connection. Companies like Facebook and Twitter have afforded businesses the opportunities to build communities around them. Making customers feel important creates brand loyalty. However, these are still relatively new waters for brands to explore. Some choose to dip a toe and test the temperature, and others dive right in.

 

2 words: CUSTOMER ENGAGEMENT

 

To understand how impactful social media can be, let’s look a fast food company that’s been making a lot of noise on Twitter for some time. Wendy’s is a center of many a debate regarding how communities should be managed on social channels. Why, you ask? Let’s suffice to say their methods are…unconventional.

Wendy’s has gained attention by roasting critics on Twitter. It’s an unusual strategy in corporate social media marketing where marketers and customer service teams typically worry about appeasing customers and being politically correct. The fast-food chain is quick to contradict anyone who question its slogan that its beef is “fresh, never frozen.” In one heated exchange about how it delivers fresh beef, Wendy’s responded “you forgot refrigerators existed for a second there.”

 

When one user wrote “you’re food is trash.” Wendy’s responded: “No, your opinion is though.”

 

When another asked for directions to McDonald’s, Wendy’s replied with a photo of a trash can.

 

The irreverent Twitter comments have attracted extensive attention on both social media and traditional media. As I said, unconventional. But has it worked? And if so, why?

 

Well, their sarcastic approach certainly isn’t hurting sales. Over the approximate four-year period of its social media campaign, the company has reported 15 consecutive quarters of positive same-restaurant sales. Another measure: in the past year, Wendy’s Co. stock has soared over 40%.

 

Mind blown? Let’s break it down. We previously discussed the process of Building a Cumulative Advantage, with designing for habit as the second step. Social media is habitual. We are constantly checking our social channels for the latest and greatest…and funniest. Wendy’s has simply found its own method amongst the madness. They’re directly engaging their customers on social media, while gaining a lot of free publicity. Sure, it’s outside the box as it relates to conventional branding. But that is exactly the point. They have found a way to establish an emotional connection with humor. People love to laugh. It makes us feel good. And while we wouldn’t necessarily recommend trashing your critics on social media, it seems to be working for the fast food juggernaut.

 

When simply put, the formula for establishing a emotional connection with consumers has shifted, and a little creativity goes a long way. “The best part of waking up” was once “Folger’s in your cup” and a newspaper. Now, the best part of waking up for many us is popping a K-cup in and seeing whom Wendy’s is trashing on Twitter.

 

Which brings us to our next talking point – convenience. Let’s continue with the coffee theme. Millions of people start their day with a cup of coffee, or in my case, several. This is a fundamental opportunity for a brand to create that emotional connection. We associate our coffee with starting the day on the right foot. For many of us, getting up in the morning is difficult, especially on those chilly mornings when our warm, comfortable beds have us trapped. Folger’s harnessed the power of these emotions in an inventive way. Remember the ad campaigns you’d see on TV with people waking up to the smell of a fresh pot of coffee? I bet many of related to this sentiment. They even told you “the best part of waking up is Folger’s in your cup.” How delightful. But what if you live alone? Who’s making your coffee and creating that smell that fills up the entire house to entice you out of bed?

 

In the 90s, Keurig gave us a more convenient solution – a single-serving brewing technology known as the K-Cup. Problem solved. No more wasted time or wasted coffee. Convenience incarnate. Consumers already had an established emotional connection to a cup of coffee, and Keurig presented a more convenient path. Now, you can most likely get your favorite blend in a single-serve K-cup, because other brands recognize the impact of convenience.

 

These concepts can be applied to any brand when properly gauging the climate of consumer behavior. Habits are self-generated. They evolve from a decision and are modified with repetition before becoming automatic. They eventually become part of our value system. If you can establish an emotional connection with your consumers, brand loyalty will follow. However, accessibility, and more specifically, technology presents a real threat to brand loyalty.

 

What is important to note that while habits die hard, they do die. In branding, convenience kills habits. Convenience is about speed, predictability and ease. And it can be difficult to combat. So what’s the solution?

 

To create a connection between your brand and your customers, engagement is essential. As previously discussed, social media provides a platform for businesses to build communities around their brands. But it’s not enough to create a Facebook business page or a Snapchat account. To build a sustainable following, actively engage your online communities by posting captivating content and being responsive. If consumers are commenting on your posts, comment back! If they’re sending messages your way, reply in timely fashion! These personalized touches lends themselves to building relationships with your customers and creating that emotional connection to keep them coming back.

 

Personalization is something you should be incorporating in your email marketing, as well. To navigate your way through the traffic in your customers’ inboxes, your content must be creative and dynamic. Incorporating tools like surveys and contests will encourage your customers to engage, and it makes them feel like they’re a part of your brand – like they’re connected.

 

Sound like a lot of work? It is, but it pays dividends. And luckily, companies like SellUp are here to help you strategize and execute email programs to increase customer acquisition and retention. When you’re sick, you go to doctor, right? SellUp has the medicine to improve the condition of your email marketing.

 

Emotional connection will always be an important nuance in branding, but now more than ever, brands are competing to present more convenient access to their products. It’s not just about solving a problem anymore. It’s about solving it fast. It’s about being the convenient solution. So, brands have to continue to do what works, and do more. To stay ahead of the curve, one must understand where the curve is headed. And while this is a challenging road that continues to wind, those providing ease of access are catching up quickly. Consumers want to feel that emotional connection, but they expect more from brands these days. And it’s because brands are giving it to them. If you want your customers to keep coming back, start a conversation. Engage. Offer convenient solutions. Be a resource.

What’s the Value of a Like? Social media endorsements don’t work the way you might think. (Via Harvard Business Review)

by Leslie K. John, Daniel Mochon, Oliver Emrich, and Janet Schwartz

 

Every year, brands allocate billions of dollars to social media marketing campaigns, in the hopes of increasing revenue. Marketers suggest that consumers are likely to buy more if they follow a brand on social media. Marketers need to utilize both push and pull marketing strategies to gain revenue from customers through social media. Companies have to support likes with branded content to connect with their most-loyal customers.

Check out this article from Harvard Business Review’s March / April issue to learn more about the value of a like.

Building A Cumulative Advantage (Part II): Keep It Simple

Building a cumulative advantage is a process that requires precision and perseverance. In Part I, we discussed the importance of becoming popular early and some methods that have proven effective, and we also addressed consumers as creatures of habit, stressing the significance designing your brand experience for habit. The evolution of technology is responsible for creating new consumer habits – for our purposes, digital habits. In this segment, we’ll address these habits, discuss the dilemma of changing your brand, and conclude with how to effectively communicate with your following.  

 

Digital habits have created new opportunities for companies to employ the aforementioned tactics. Facebook is the most common example. The interface, while slightly altered to enhance the viewing experience, has maintained the same design and color scheme since its inception. Consumers can identify a Facebook page from a mile way, because the layout is just that – identifiable.

 

Consumer behaviors are quite possibly the most valuable metrics a marketer can study. This information identifies trends, indicating how consumers spend their time while online.  Regarding traditional marketing and advertising methods – TV, radio, print, etc. – brands must rely on antiquated methods, like surveys, to obtain similar data. With advances in technology, the analysis of consumer behaviors (digital habits) forms a more definitive roadmaps. Enter the phenomenon of retargeting.

 

Retargeting is a form of digital, targeted advertising by which online advertising is targeted to consumers based on their previous internet actions. Essentially, consumers view products and services on social media and across the internet, and then the ads follow them around, as to appeal to consumer habits and impulses. Have you ever viewed a pair of shoes on Amazon and then noticed the same pair of shoes popping up on Instagram and Facebook? You’ve been retargeted.

 

Because the interfaces of these service providers appeal to consumer habits, advertising and retargeting efforts become white noise. We know they’re there, but they’re not bothersome. This is only achieved when consumers feel comfortable. So, what happens when a brand feels it’s time to make a change? As discussed in the first entry in our series, The Art of Balance, it’s time to innovate inside the brand.

 

Through dynamic marketing efforts and tireless analysis, you are well on your way to building a cumulative advantage over the competition. You’ve become popular. You’ve designed your brand to appeal to consumer habits. Now, all you have to do is keep it simple. Yet still, some brands choose to shake things up and make changes to attract new customers, which often times results in breaking the consumer habits you’d worked so hard to establish. Technology is breathing down the necks of brands all the time. It whispers, “Stay relevant. Keep with the times. Update your logo. Try something new.” Technology is an invaluable asset to brand strategy, but it can also mean a brand’s demise. To avoid pitfalls of change, play it safe – innovate inside the brand.

 

Facebook vs. Myspace

 

Similar platforms. Similar functionality. So what happened to MySpace? Why did Facebook become the phenomenon it is? Answer: innovating inside the brand. In 2008, Facebook overtook MySpace, boasting 600 million users, for one simple reason. Facebook let the market dictate where it went and innovated inside the brand. On MySpace, users could modify and customize their profile pages. So, all user pages were different. If you remember a few paragraphs back, we discussed the importance of consistent design and branding. Facebook listened. All user profiles look the same, and users are given the freedom to do what they like within the standard interface. At a bird’s eye view, MySpace tried to dictate the market, made too many changes, and gave their users too many freedoms to create a cumulative advantage. Facebook continues to innovate inside their brand, constantly adding features like Live video and new apps, and in turn, they have developed an entire subculture within their business model. Change consistently, and you can consistently change.

 

Lastly, communication should be clear and concise. Don’t make consumers think too hard about your brand and the services offered. We live in a world that moves very quickly. The attention span of your target audience is limited. Capture their attention directly, and be clear in your messaging to complete the cycle of cumulative advantage. There is a tendency in today’s advertising climate to be artful and complex, but then, the power shifts and your brand’s success will be contingent upon the attention of the consumer.

 

Cumulative advantage is not a new concept, but the habits of consumers have changed and will continue to change. If content is king, convenience is its high-maintenance queen. The most successful brands continue to find innovative ways to answer an age-old question – how do we offer the best resolution to a problem? While some argue that cumulative advantage is a nonfactor, negated by accessibility to technology, I’d argue that technology can and will bolster the process of building a competitive edge, when coupled with thorough analysis and careful implementation. It’s time to pay closer attention to the way consumers want to receive information.

 

To review:

 

Become popular. Everybody loves “FREE.”

 

Design your brand to cater to the habits of your target audience.

 

Change can make or break your brand. When necessary, innovate from within.

Communication is paramount, but keep it simple with clear and concise messaging.

 

Brand responsibly.

Building A Cumulative Advantage (Part I): Popularity & Designing For Habit

In sociology, the Matthew effect, also known as accumulated advantage, is the phenomenon where “the rich get richer and the poor get poorer.” This concept translates to marketing in that companies who develop a competitive edge and become popular early on are more likely to become more popular, succeed over time and sustain their success. There are arguments that cumulative advantage is a dying art in the advent of technology, but we’re here to examine the process and, perhaps, prove that technology can actually be a catalyst for sustainability for brands that chose to embrace new trends and employ the latest innovations.

To further understand cumulative advantage, let’s address the phenomenon of going “viral.” When you hear about or come across a video with over a million views on YouTube, for instance, there is an innate desire for most to see why this particular video has drawn so much attention. You are more compelled to watch a video that develops a reputation and has an impression on so many of your peers versus a video with 5 or 10 views. This is the concept of cumulative advantage.

This is one of the mechanics of word of mouth and something that clearly sets us up – as marketing strategists – to think of the world in which we’re living as highly dynamic. Today, we are highly connected, and data travels fast. This is why I would venture to say that cumulative advantage is not dying. It’s just more difficult to harness. With so many information highways at a marketer’s disposal, the pressure is in a choice – which do I choose?

This is the opportunity that we have today. Everything is a living lab, where we can watch our target markets operate in nearly real time, with stacks of algorithms and analytics at our fingertips. Running a marketing program is more about optimization today than it is about initial insight. It is about flexibility and the ability to think quickly and recognize patterns as they begin to emerge. We are creatures of habit, and to establish a competitive edge and build a cumulative advantage, marketing must appeal to our habits in a dynamic way.

Let us now look at what it means to become popular. As stated in the recently retired CEO of Proctor & Gamble, A.G. Lafley, and professor at and the former dean of the Rotman School of Management at the University of Toronto,
Robert L. Martin’s 2017 Harvard Business Review article, Customer Loyalty is Overrated, “Marketers have long understood the importance of winning early.” How do many industry juggernauts “win early”? Providing value free of charge. The HBR article references Tide as an example. “When it was introduced, in 1946, (Tide) immediately had the heaviest advertising weight in the category. P&G (Proctor & Gamble) also made sure that no washing machine was sold in America without a free box of Tide to get consumers’ habits started. Tide quickly won the early popularity contest and has never looked back.” In the era of digital technology we need not look far to observe how this trend has evolved.

Facebook. Twitter. Google. Amazon. Recognize these names? Of course you do. And they are all free services – deliberately engineered to offer a service that people want. The more people want it, the more popular it becomes. Then, providers and advertisers follow, because everybody wants to be where the consumers spend their time.

Becoming popular is the first step in building a cumulative advantage for a reason. Marketing is a numbers game. Get the people’s attention, and the masses will follow. How often have you been offered a free trial for a paid service? People love free. And then idea is that once consumers are hooked, they are more likely to pay. As I said, we are creatures of habit.

This leads us to our next step – designing for habit. This is such significant element of branding that we’ve decided to dedicate an entire entry to The Power of Habit. Stay tuned, but for now, let us scratch the surface. Marketing should never leave the outcome entirely to chance. Consumers have compulsions, and the most successful marketing efforts take advantage of these compulsions, respectfully. As customers, we want our purchase decisions to be easy, and we actually make most purchases automatically. That’s why the subscription model has become so popular in so many industries. We don’t need to consciously decide about routine purchases.
It’s all about gaining Cumulative Advantage — once you gain a small advantage over the competition, it grows over time as purchasing your product or service becomes a habit to customers.

Make it easy to buy, and make your product memorable. The most successful brands have consistent elements of product design that can be seen from a distance so buyers can find the product quickly. Take Tide, for instance. You’re walking down the laundry detergent isle in the supermarket, and Tide stands out. The logo resembles bull’s-eye, as to say to the consumer – “You have hit the mark!” Distinctive colors and shapes for the product and logo make it easier for customers to make the habitual choice. Memorable messaging in as few words as possible goes a long way.

In our next segment, we’ll dive deeper into consumers’ digital habits and discuss how your brand can communicate clearly and effectively to sustain a following. For now, remember becoming popular early is the foundation for establishing a competitive edge. Once you’ve earned popularity, the idea is become habitual. Building a cumulative advantage doesn’t happen overnight, but if you play your cards right, appealing to your target audience’s need for convenience, your brand is well on its way.

In preparation for what will follow in Part II, let’s review some key points:

  1. Becoming popular is an uphill battle. Word of mouth has evolved. We live in a world that is overrun with options. Technology creates opportunity for small entities to gain traction through cost-effective methods. Accessibility has evened the playing field, forcing brands to be more creative than ever to earn popularity.
  2. Understanding consumer behaviors is the key to designing for habit and creating a following. In its simplest form, marketing is an opportunity for a brand to create its customers. The task then becomes managing and continuing to nurture those relationships. Staying relevant is perhaps the greatest challenge of all. Consumers may like the feeling of having options, but there is a reason the easy choice is, often times, the most popular. A choice that’s convenient AND fulfills a need is really no choice at all. It just makes the most sense.

There is a fine line between becoming the habitual choice of your consumer and becoming an afterthought, however. This is the line we will venture to examine in PART II. With new choices presenting themselves every day, the struggle to maintain relevance can easily become a pitfall. Brands feel the pressure, make rash decisions, changes to their brand identity and messaging, and in some cases, this can lead to the dismantling of the popularity and following they’d worked so hard to cultivate.

Avoiding these pitfalls is more fundamental than it may seem. Stay tuned as we offer our insights in Part II as to how brands can use the momentum outlined in this segment to sustain their cumulative advantage and successfully nurture customer relationships.

The Art Of Balance

Light bulbs. Batteries. Motor Oil. These are all things that require changing, and there are clear indications when they need changing. Changing a brand, on the other hand, can include more complication and consequence. So, when do you change your brand, and how much do you change it? Should it be subtly refreshed or totally redesigned? Branding strategies are meant to guide the consumer in the direction of a convenient choice that fulfills a need, and, in turn, becomes habitual. And while habits die hard, technology presents new and interesting options to consumers every day, which begs the question – how do brands stay relevant? The key: innovating inside the brand.

For the sake of this segment, let us assume we’re addressing brands that have successfully defined their value proposition and target audience, became popular, and implemented a design to harness the power of consumer habit to form a cumulative advantage. (Take a breath). What’s a cumulative advantage, you ask? Stay tuned, as we’ll break this concept all the way down in our upcoming series. Essentially, it’s a competitive edge that compounds over time. However, advances in technology are challenging this tenet. Brands are being forced to constantly review their approach, delivery, and other strategic principles in an effort to stay relevant, while keeping their base comfortable with the brand they’ve learned to love.

Creating a great experience as a brand means staying relevant when our world is moving a million miles a minute. When your brand is relevant, it makes sense to your audience. The problem is, audiences are changing now more than ever – not necessarily the demographic but their preferences. Our behaviors change depending on trends and technology, which changes the way an experience is created and distributed.

Accessibility has majorly changed how consumers purchase, and therefore, has changed the dynamic of branding and the landscape of brand loyalty. Technology is the primary catalyst for change in branding. So, staying ahead, or at least with the curve as things change means increasing the probability that consumers will stay connected and engaged, regardless of their preferences or habits. When a brand creates a great experience that is contextual, nimble in the face of change, and continually valuable, consumers will keep coming back.

But how far is too far? Sometimes less is more, and a simple change to accommodate your audience’s need in a more convenient way involves a mere implementation of new technology to give your audience something familiar in a new way. We’re witnessing an evolution in branding that has shifted away from customer loyalty toward convenience.

I think back to my childhood. The weekend arrived, and I used to love to go to the video store to pick out new movies. There was something to the aesthetic – being surrounded by walls of cinematic history, exploring what seemed like endless options. People don’t have time for aesthetics these days. We want what we want when we want it. And as consumers, we look for the most convenient access. Enter Netflix. A reasonable monthly subscriber fee and a mailing address later, and the endless options are in your mailbox. Video stores, like Blockbuster, tried to compete, but the market was cornered quickly. And that was only phase one.

Phase two. Now, I wasn’t in the room at Netflix headquarters, but I’m assuming a very simple, age-old question was asked: how can we better serve our audience and improve the ease of access to our service? Answer: digital streaming. To be concise, I haven’t laid out the entire evolution of Netflix in a timeline. The important thing to note is this – they innovated within the brand. No logo change. No relaunch. No major design implementation.

Simple solutions. It’s easy to lose your brand identity when rebranding, and sometimes customer loyalty will carry you through. Consumers want to keep coming back. They want to feel comfortable, until comfortable becomes stale or inconvenient. Improvement is the remedy for indifference.

As A.G. Lafley and Roger L. Martin aptly state, when referring to Netflix in their 2017 Harvard Business Review article, entitled Consumer Loyalty is Overrated – “For customers, improved is much more comfortable and less scary than new, however awesome new sounds to brand managers and advertising agencies.”

An emotional connection to a product or service will always be asset to a brand’s success, but constant changes in technology have more brands consistently working to upgrade ease of access to their products, while maintaining the connection that originally attracted their audience. And therein lies the challenge. It’s easy to succumb to the thought that your brand may need more than a simple improvement, and next thing you know, the brand your audience has come to know and love is nearly unrecognizable. This can be a major pitfall.

The advent of the internet and advancements in digital media and technology have transformed how consumers experience the promises that brands make. They have also transformed our ability to shape and co-create those experiences and to tell millions of other people about our experiences – good, bad, or indifferent. But brand owners have had to face transformative challenges before. And the brands that pull through are those that do what they must to stay relevant, while staying true to the experience
they’ve created.

Such transforming factors have, though, never changed the fundamentals of brand building: gain continuous insight into what your customers want, understand how they want it, know how the purpose of your brand helps them, be clear about your promises and deliver them brilliantly.

Take IBM, for example. IBM does not sell computers any more, but its brand purpose is still driven by the same insight that Thomas R. Watson had in 1915 – that ‘information technologies would benefit mankind.’ Today, IBM speaks publicly through its advertising of a purpose to create a ‘smarter planet,” and they continue on that journey with technology in the sidecar. Sometimes improving your brand means trimming the fat to improve focus.

The best brands have adapted to the changing needs of society, not just to the individual needs of consumers in that society. In fact, they anticipate the needs of tomorrow’s society. Technology is the primary force dictating these needs. To stay relevant, brands must pay attention. Consumers have to trust you before they jump. But once they jump, it’s a brand’s job to keep them from landing and looking for the next leap. Innovating from within your brand is an impactful way to improve the consumer experience, when done with proper planning. Sometimes, that includes major improvements, and other times, less means more. Either way, fail to plan, plan to fail. Stay relevant, yet familiar. That is the art of balance.

No More Athleisure, Brick And Mortar, Made in China? How Fashion Will Change In 2017 (Via Fast Company)

The tectonic plates of the fashion world are moving. Here are four shifts to expect next year.

Change is afoot in the fashion industry.

We’ve already seen glimpses of how the tectonic plates in the fashion world are moving. In one of Fast Company’s best-read fashion stories of 2016, we explored how some of the premium U.S. fashion brands of the past—Tommy Hilfiger, Calvin Klein, Ralph Lauren—have lost their luster.

They’re losing ground to a new generation of direct-to-consumer brands that were born on the internet, including Everlane, Cuyana, M.Gemi, DSTLD, American Giant, and Vrai & Oro. These companies are offering something different from the flashy designers of yesterday: the insight into their supply chain and sometimes even a breakdown of their sales margins, providing the customer with a better understanding of the quality they’re getting for their money.

Over the next year, we’ll see how these online brands continue to transform the fashion landscape. We’ll see big shifts in brick and mortar stores, fashion supply chains, the athleisure trend, and the idea of value.

1. Brick and Mortar Makes A Comeback

Awesome online and in-store experiences give rise to the “super customer.”

When online shopping took off a decade ago, pundits predicted that physical shops would disappear. It turns out that brick-and-mortar stores have remarkable staying power, but their purpose has fundamentally changed as fashion brands try to figure out how physical retail outlets fit in to the shopping experience. “Brands are thinking about what the internet cannot give you,” says Katia Beauchamp, CEO of beauty subscription service Birchbox, pointing out that digital tools now allow you to come close to seeing, touching, and even trying on products.

In Beauchamp’s view, the one thing the internet does not provide is human contact. She predicts that in 2017, customers will increasingly visit stores to get curated experiences from shop representatives. For brands to meet this demand, they need to have well-trained staff who understand products inside and out and can offer personalized advice.

We will also see a rise in experiential retail, according to Michelle Cordeiro Grant, the founder of underwear brand Lively. To encourage consumers to spend time in their stores browsing their products, brands will get more creative, adding amenities like bars, coffee shops, and yoga classes. In other words, stores will become more like entertainment spots for people who share similar lifestyles and interests to spend time together. “There will be an emphasis on physical brand experiences that will enable consumers to engage with not just product, but brand ethos and community,” she says. “The main objective of this kind of blending will be brand awareness, but the scope and reach will be much more than what’s been traditional. These experiences will be leveraging what is happening with social and taking it offline.”

Direct-to-consumer luxury shoe company M.Gemi says that fashion companies that understand how brick-and-mortar intersects with digital will see the rise in the “super customer.” M.Gemi launched a pop-up store in New York earlier this year and found that customers who had a good experience in-store would eventually spend more online and return fewer products than digital-only customers. Similarly, digital customers who went to stores would purchase 33% more in-store than new customers. “The website and the store seemed to be mutually reinforcing,” says Cheryl Kaplan, M.Gemi’s president.

Now M.Gemi is making the most of these insights by opening additional shops and creating a more seamless experience between digital and brick-and-mortar. For instance, a customer will be able to leave a store and find all the shoes that she tried waiting in her online shopping cart. “This is just the first of many ways we’re experimenting with bringing these two experiences together,” she says. She believes these efforts will generate even more “super customers.”

2. We Finally Ditch The Term “Athleisure”

It’s just how we dress.

Last year, the “athleisure” trend became so widespread that the word was officially added to the Merriam-Webster dictionary. The awkward portmanteau refers to athletic clothing that can be worn during leisure activities (i.e., everyday life)—a style kickstarted by Lululemon, creator of yoga pants you could wear to brunch. In the last few years, dozens of new athleisure companies—Bandier, Outdoor Voices, Alala—have entered the market, selling high-performance activewear designed to be worn outside the gym.

But ironically, just as the term enters the official lexicon, some say it won’t be necessary because athleisure has become so ubiquitous. “In 2017, athleisure as a concept will simultaneously cease to exist and be everywhere, as it is assimilated into consumers’ lifestyles and wardrobes,” says Denise Lee, founder of Alala. “I see it becoming less of a trend and more of a normal way of life.”

Gregory Lowe, the founder of Fitbox, an activewear subscription service in which Rebecca Minkoff has recently invested, concurs. “It is not a trend,” he says. “It’s a new way of life sparked by millennials’ interest in being stylish and comfy at the same time.” Lowe thinks that from now on, all apparel brands will be designing clothes with comfort and performance in mind, while the athleisure market will continue to become more complex. Some lines will focus on fashion and luxury (see: Prabal Gurung Sport and Cushnie et Ochs’s capsule collection). Others, such as Adidas’s line, will be primarily focused on using advanced technical materials.

Nina Faulhaber, the cofounder of the athleisure brand ADAY, also believes that customers are increasingly looking for high-tech garments they can wear to work. “In the post-athleisure world, consumers want the benefits of athleisure without the ‘I just went to the gym’ vibe,” she says. “Comfort and versatility will be hiding in everyday garments. The less of a spandex look, the better.”

This year, ADAY launched a pair of leggings that are designed to be worn throughout the day, even in professional contexts. Made of moisture-wicking fabric, they have a matte finish that does not look like nylon or spandex and have lots of useful features, including special pockets for your cell phone. One woman wore hers in a meeting with British Prime Minister David Cameron, Faulhaber says.

3. Value Matters More Than Labels

Customers are smart and want to know what they are paying for.

In 2010, Warby Parker and Everlane were among the first brands to make transparency a key part of the customer experience. They offered products at lower prices than designer alternatives, and emphasized the importance of quality through brand storytelling. They explained that by cutting out middlemen and selling through their own channels, they could save the customer money.

These days, customers expect to know exactly what they are paying for. Many upstarts that recently entered the market—bag brand Oliver Cabell, denim brand DSTLD, jewelry brand Vrai and Oro—have all adopted the direct-to-consumer model. “Quality and value are increasingly sought after, more so than specific brand-name or luxury-brand status,” says Karla Gallardo, founder and CEO of women’s fashion label Cuyana. “This is a new type of ‘value’: It no longer necessarily means low prices for low quality, but rather low prices for high quality—made possible by being direct-to-consumer.”

Gallardo believes that over the next year, companies that build their business model on making large wholesale margins will struggle to compete with this new flock of brands. Consumers are also losing interest in big discounts since they often come paired with lower-quality products. Gallardo says that brands struggling to survive in this shifting landscape—including J.Crew and the Gap Brands—will need to rethink their entire supply chain so they are making high-quality products with the best materials, then selling them at the best possible prices. This means not only being “direct-to-consumer” but also “direct-to-supplier.”

4. Made In America

More production is returning home.

President-elect Trump ran on a platform of bringing more jobs back to the U.S. by eliminating free trade deals. It’s unclear whether he will actually follow through on these promises—and whether Congress will work with him to bring them to fruition—but the fashion industry is already thinking about how such legislation could change their business. The majority of U.S. fashion brands have moved production to Asia, where labor costs are lower. But there’s been a shift in recent years as a wave of startups have chosen to make products in U.S. factories because it allows them to better monitor quality and take advantage of the most recent manufacturing technology. The possibility of higher tariffs on overseas manufacturing may prompt more fashion brands to follow the startups’ lead and head back to the U.S.

Bayard Winthrop, the founder and CEO of American Giant, a brand that makes all of its products in the U.S., believes that the U.S. government’s efforts to bring more jobs back by introducing tax breaks and benefits is only part of the solution. American companies need to be able to make products locally so efficiently and cost effectively that they are able to compete with foreign manufacturers. “The focus needs to be on fostering competitiveness,” he says.

To do this, Winthrop says that fashion brands need to reimagine every aspect of their supply chain, so that they are able to make a high-quality item at a good price. This sometimes means upgrading factory technology so that the machines are more efficient and require less human intervention. It might mean sourcing materials locally to cut down on shipping costs. “Brands that are nimble and driving change have much lighter cost loads and are freed from this accelerating downward pressure,” he says. “There is room for them to be responsive and innovative.”

The good news for companies committed to making products locally is that U.S. consumers welcome this change. They want high-quality products, which American factories often can deliver more easily than their Asian counterparts because of U.S. access to cutting-edge technology. According to the 2016 McKinsey Millennial Survey of 11,000 U.S. customers, quality was a top driver of purchasing behavior. As a result, the “fast fashion” model, which was fueled by cheap overseas manufacturing, is waning. “The more time you spend wearing or even just looking at fast fashion as a category, the more aware you become of the shit quality,” Winthrop says. “This idea of ‘newness’ is dampened by poor make. The signal change is that a growing segment is purely interested in quality, less is more, and owning fewer things.”

DSTLD, an L.A.-based denim brand that makes most of its products in local factories, has made the same observation. “[Customers] are looking at where items are made, how products are made, and the materials that go into each product,” says cofounder Corey Epstein. He says the brand has found that customers are attracted to its commitment to sustainability, zero sweatshops, and reducing the impact fashion is having on the world.

In the upcoming year, Epstein thinks that companies and consumers will both take a “less-is-more” approach to fashion. “More and more brands are focusing on smaller, more timeless product lines,” he says. “We’re not trying to make the cheapest white T-shirt, but the most well-constructed, best-fitting, softest T-shirt, at the absolute best price.”

 

Credit: Elizabeth Sevran for Fast Company